PNB detects $1.77 bn fraud

News and Press Release - Dated:- 15-2-2018 - New Delhi, Feb 14 (PTI) In what could be the biggest banking fraud in India, state-owned Punjab National Bank today said it has detected a USD 1.77 billion scam in which billionaire jeweller Nirav Modi allegedly acquired fraudulent letters of undertaking from one of its branches for overseas credit from other Indian lenders. PNB has suspended 10 officers over the USD 1.77 billion (about ₹ 11,400 crore) scam and referred the matter to CBI for inv .....

9;s second-biggest state-run bank said in a regulatory filing. Based on these transactions other banks appear to have advanced money to these customers abroad. While PNB did not name the other lenders, Union Bank of India, Allahabad Bank and Axis Bank are said to have offered credit based on letters of undertaking (LOUs) issued by PNB. An LOU is a letter of comfort issued by one bank to branches of other banks, based on which foreign branches offer credit to buyers. Foreign bank branches too are .....

he magnitude of the fraud. In the complaint, PNB had named three diamond firms - Diamonds R Us, Solar Exports and Stellar Diamonds - saying they had approached it on January 16 with a request for buyers' credit for making payment to overseas suppliers. The bank sought 100 per cent cash margins for issuing LoUs for raising buyers' credit, which was contested by the firms, saying they had availed of the facility from as early as 2010. Nirav Modi, his wife Ami, brother Nishal and Mehul Chok .....

ions. This (investigation) is a part of the clean up drive that started with AQR (Asset Quality Review) in 2015. Post clean up, this is going to make banks clean forever, healthy, responsive and enable them to provide hassle-free banking to all honest borrowers, Kumar said. A senior official of a public sector bank said there is strict instruction from the finance ministry to all banks that no big fish should go scot-free and no honest borrower is harassed. Banks are now looking at their systems .....